Shivnandan Narendra Sanvordekar Vs ITO (ITAT Panaji)
The appeals concerned a common issue for AYs 2020-21 and 2021-22 regarding whether compensation received by employees of Bharat Sanchar Nigam Limited (BSNL) under the BSNL Voluntary Retirement Scheme (VRS), 2019 constituted retrenchment compensation and a capital receipt eligible for exemption under Section 10(10B) of the Income-tax Act, 1961. The assessees submitted that the issue was squarely covered by the Tribunal’s earlier decision in Prathibha Jagdish Unawane, while the Revenue contended that the payments were made under a voluntary retirement scheme and were governed only by Section 10(10C).
The Tribunal noted that its earlier decision had comprehensively dealt with identical issues, including delay in filing appeals before the CIT(A), claims for exemption made for the first time before the appellate authority, and the taxability of BSNL VRS compensation. In that decision, the Tribunal had observed that BSNL introduced the VRS-2019 as part of the Union Cabinet’s revival plan for BSNL and MTNL, under which ex-gratia compensation was paid to eligible employees. The Tribunal had also noted that many assessees initially offered the compensation to tax after claiming exemption under Section 10(10C), and subsequently sought exemption under Section 10(10B) before the CIT(A).
The earlier decision, reproduced in the present order, recorded that the Revenue opposed the claim on the grounds that it was not made in the original return and that Section 10(10C) alone applied to BSNL VRS compensation. The Revenue also argued that voluntary retirement could not be equated with retrenchment under Section 10(10B). The Tribunal, however, had held that the delay in filing appeals ought to have been condoned, observing that the assessees had filed their returns based on professional advice available at the relevant time and later raised the exemption claim after judicial decisions recognised such entitlement. It emphasised that substantial justice should prevail over procedural delay.
